The Economic Impact of Coal and Coal-Fired Power Generation in West Virginia
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THE ECONOMIC IMPACT OF COAL AND COAL-FIRED POWER GENERATION IN WEST VIRGINIA WINTER 2021 The Economic Impact of Coal and Coal-Fired Power Generation in West Virginia is published by: Bureau of Business & Economic Research West Virginia University College of Business and Economics PO Box 6527, Morgantown, WV 26506-6527 (304) 293-7831; [email protected] bber.wvu.edu WRITTEN BY Christiadi PhD Research Associate Eric Bowen PhD Research Assistant Professor John Deskins PhD Director Priscila Borges Marques Dos Santos Research Scholar Funding for this research was provided by the West Virginia Coal Association. The opinions herein are those of the authors and do not necessarily reflect those of the West Virginia Coal Association or the West Virginia University Board of Governors. © Copyright 2021 WVU Research Corporation ii Bureau of Business & Economic Research Table of Contents List of Figures and Tables ............................................................................................................................. iv Executive Summary ....................................................................................................................................... v 1 Introduction ........................................................................................................................................ 1 2 Coal and the West Virginia Economy: Recent Trends ......................................................................... 2 3 West Virginia Coal Exports ................................................................................................................ 11 4 Economic Impact of Coal Production in West Virginia ..................................................................... 14 5 Economic Impact of Coal-Fired Power Generation in West Virginia ................................................ 16 5.1 Grant County ........................................................................................................................... 17 5.2 Harrison County ....................................................................................................................... 18 5.3 Marion County ......................................................................................................................... 19 5.4 Marshall County ...................................................................................................................... 20 5.5 Mason County ......................................................................................................................... 21 5.6 Monongalia County ................................................................................................................. 22 5.7 Pleasants County ..................................................................................................................... 23 5.8 Putnam County ........................................................................................................................ 24 5.9 Total Economic Impact of Coal-Fired Power Plants In West Virginia ...................................... 25 6 Economic Impact of Coal Mining and Coal-Fired Power Generation ................................................ 26 7 Appendix ........................................................................................................................................... 27 iii Bureau of Business & Economic Research List of Figures and Tables Figure 1: Economic Impact of Coal Mining and Coal-Fired Power Generation in West Virginia ................. vi Figure 2: Annual Coal Production, West Virginia vs Other U.S. States ......................................................... 2 Figure 3: West Virginia Share of U.S. Annual Coal Production ..................................................................... 3 Figure 4: West Virginia Regional Coal Production ........................................................................................ 4 Figure 5: Coal Mining Employment in West Virginia .................................................................................... 5 Figure 6: Average Annual Wage by Industry, West Virginia, 2019 ............................................................... 6 Figure 7: Coal Mining Share of Total Employment and Wages .................................................................... 7 Figure 8: Distribution of West Virginia Coal by Consumer ........................................................................... 8 Figure 9: West Virginia Coal Shipments to Power Plants by Destination State, 2011 vs 2019 ..................... 9 Figure 10: U.S. Coal Demand Forecast ........................................................................................................ 10 Figure 11: Coal Exports, West Virginia vs Other U.S. States ....................................................................... 11 Figure 12: West Virginia Coal Exports as a Share of U.S. Coal Exports ....................................................... 12 Figure 13: West Virginia Coal Exports as a Share of the State’s Total Exports ........................................... 13 Figure 14: Economic Impact of Coal Mining in West Virginia ..................................................................... 15 Figure 15: West Virginia Coal Power Plants Included in the Analysis ......................................................... 16 Figure 16: Economic Impact of Coal-Fired Power Plant in Grant County ................................................... 17 Figure 17: Economic Impact of Coal-Fired Power Plant in Harrison County .............................................. 18 Figure 18: Economic Impact of Coal-Fired Power Plant in Marion County ................................................ 19 Figure 19: Economic Impact of Coal-Fired Power Plant in Marshall County .............................................. 20 Figure 20: Economic Impact of Coal-Fired Power Plant in Mason County ................................................. 21 Figure 21: Economic Impact of Coal-Fired Power Plants in Monongalia County ....................................... 22 Figure 22: Economic Impact of Coal-Fired Power Plant Pleasants County ................................................. 23 Figure 23: Economic Impact of Coal-Fired Power Plant in Putnam County ................................................ 24 Figure 24: Economic Impact of All Coal-Fired Power Generations in West Virginia .................................. 25 Figure 25: Economic Impact of Coal Mining and Coal-Fired Power Generation in West Virginia .............. 26 Appendix 1: West Virginia Coal Exports by Country of Destination, 2020 ................................................. 27 Appendix 2: World Coal Exports, West Virginia vs. Other Counties, 2020 ................................................. 28 iv Bureau of Business & Economic Research Executive Summary While coal production in West Virginia has declined by more than 50 percent over the past decade or so, the sector remains an important part of the state’s economy. In this report, we consider the contribution of coal mining and coal-fired power generation to the state’s employment base, economic output, and tax revenue. We begin with a detailed examination of recent trends in coal production, employment, employee compensation, and coal distribution for West Virginia over the past several years. We also consider coal exports, which may provide a potential growth area as domestic demand for coal declines over the long term. The core of this report is an estimate of the economic impact of coal and coal-fired power generations on the West Virginia economy. Statistics indicate that coal mining directly employs more than 13 thousand workers in West Virginia who earn a total compensation of around $1.5 billion annually. Further, our estimates indicate that coal mines spend a total of around $6.5 billion in the state’s economy directly. However, the total economic impact of the industry does not end there. As coal mines operate, they purchase various inputs from local suppliers, thereby increasing demand for upstream businesses. Further, as coal mine employees spend their earnings in the local economy, further economic activity is created. Finally, the primary downstream purchaser of coal–coal-fired electric power generation–injects billions of dollars into the state’s economy, with more than 2,000 high-wage workers. Highlights of our economic impact analysis are as follows: Coal Mining • Coal mining generated approximately $9.1 billion in total economic activity in the state of West Virginia in 2019. • Coal mining supported nearly 27 thousand jobs in West Virginia in 2019. • Coal mining provided around $2.1 billion in employee compensation in West Virginia in 2019. • Coal mining generated around $514 million in severance tax, and other state and local tax revenue for West Virginia and its local governments. Coal-Fired Power Generation • Coal-fired power generation generated approximately $4.8 billion in total economic activity in the state of West Virginia in 2019. This impact is net of the impact associated with the purchase of West Virginia coal, which is already accounted for in the coal mining impact above. • Coal–fired power generation supported nearly 6.6 thousand jobs in West Virginia in 2019. • Coal-fired power generation provided around $725 million in employee compensation in West Virginia in 2019. • Coal-fired power generation supported more than $97 million select state and local tax revenue for West Virginia and its local